A Firm That Provides Tax Services to the Public Intends

question 40

Multiple Choice

A firm that provides tax services to the public intends to offer a premium tax-return service at a higher price than their current services. The managers of the company ask experts in marketing to determine how much an effective ad campaign for such a service would cost, and by how much sales would increase. They consult experts in economics to calculate the increases in revenue from the success of the campaign, experts in operations to determine the cost of offering the service, and experts in strategy to anticipate possible counter-moves by competitors. Which of the following points about the role of financial managers does this example illustrate?

• A) Real-world decisions are complex and require information from many sources if the decisions are to be valid.
• B) Determining the costs associated with making a decision is easier than determining the potential benefits of the decision.
• C) All of the costs and benefits associated with a decision can never be fully identified.
• D) Ultimately the decision whether to take a certain course of action rests with the financial managers of a company.

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Definitions:

Risk

Risk involves the possibility of losing something of value or the potential for an action or event to lead to an undesired outcome, often quantified in terms of probability and impact.

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on demand or at a set time, and are transferable by endorsement.

Significance

The importance or meaning attached to something, often relevant in the context of making legal, social, or scientific determinations or judgments.

Sale of Goods Act

Legislation governing the sale of goods, providing rules on contracts, property transfer, and warranties to protect buyers and sellers.